Efficiency in the Repeated Prisoner’s Dilemma with Imperfect Private Monitoring

Efficiency in the Repeated Prisoner’s Dilemma with Imperfect Private Monitoring

By Kyna Fong, Olivier Gossner, Johannes Horner, Yuliy Sannikov
April 10,2011Working Paper No. 3434

We prove that there exist equilibrium payoffs arbitrarily close to the efficient payoff in the two-player prisoner’s dilemma with low discounting under imperfect private monitoring, provided that the monitoring structure is not too uninformative, and signals satisfy a condition of positive correlation. We assume no communication, and no public randomization device.